Is GovTech Ready for Blockchain?

Andy Richardson

25 August 2017

Is GovTech Ready for Blockchain?

Public’s Andy Richardson explains the nuances of using blockchain to solve public sector problems.

Blockchain is a technology that many people have heard of, but one that still benefits from some explanation. In the simplest terms, blockchain can be thought of as a database that is distributed between many machines. Each machine has a copy of the data, and any changes need to be agreed upon by the majority of machines. This is known as Distributed Ledger Technology (DLT). Think of the database record as being an accountant’s ledger which only gets updated when the majority agree to changes.

Opinion on the usefulness or applicability of the technology varies from unwavering positive hype to unenthusiastic dismissal. As with many things, the sensible point of view lies somewhere in between. Before thinking of possible uses for blockchain within GovTech, however, we need to address disintermediation.

“Is blockchain at odds with delivering technology solutions for a central, trusted authority?”

One of the central concepts of blockchain is that it is an enabler of disintermediation: it removes the need for a central trusted authority. As long as the majority of machines agree, we don’t need to wait for an ‘official’ confirmation. Trust is created by consensus, not authority.

However, blockchain’s ‘trust by consensus’ comes with a price. For a machine to agree to data changes, it needs to see the data. The data you act upon is public and visible to all of those who form consensus.

One of the most pressing questions for GovTech might be “Is blockchain at odds with delivering technology solutions for a central, trusted authority?”. Central government has many needs for a single trusted authority for private data — for example, having HMRC as the sole custodian of official tax records.

At the present time, it requires some mental gymnastics to see how technologies that rely upon information being public can benefit organisations that need to keep data secured. One possible solution is ‘private blockchains’. This is the process of using blockchain technology but in a closed environment. You provide trust by consensus, but a central authority is able to decide who can see the data and offer consent to changes. Data is held securely and away from public access.

Some argue that by making blockchains private, you are robbing them of the main point of their existence — their disintermediation of centralised authority. However, others dispute that private trust-by-consent is the immediately useful part of blockchain.

The technology that underpins blockchain is nothing new. There is an opportunity for GovTech to use DLT in situations where having a provable and trusted record of events is beneficial. It is GovTech’s responsibility to see through the hype and clearly articulate the benefits of this old ‘new technology’.